OECD Regions at a Glance

National growth tends to be driven by the dynamism of a small number of regions. OECD Regions at a Glance analyses and compares major territorial patterns and regional trends across OECD countries. It assesses the impact of regions on national growth. It identifies unused resources that can be mobilised to improve regional competitiveness. And it tackles more intangible factors that can make the difference: it shows how regions compete in terms of well-being (access to higher education, health services, safety etc.). Regions at a Glance presents over 30 indicators covering such variables as growth, employment, unemployment and crime in a reader-friendly format. Each indicator is illustrated by graphs and maps. A dynamic link (StatLink) is provided for each graph and map, which directs the user to a web page where the corresponding data are available in Excel®.

OECD Regions at a Glance is the one-stop guide for understanding regional competitiveness and performance, providing comparative statistical information at the sub-national level, graphs and maps. It identifies new ways that regions can increase their capacity to exploit local factors, mobilise resources and link with other regions. Measuring such factors as education levels, employment opportunities and intensity of knowledge-based activities, this publication offers a statistical snapshot of how life is lived – and can be improved – from region to region in the OECD area.

This fourth edition of OECDRegions at a Glance showcases the contribution of regions to stronger, fairer and cleaner economies, drawing on both the latest comparable data and past trends across regions in OECD countries. It highlights the persistence of regional disparities, underscores unused resources that can be mobilised to maximise regions’ competitive edge, and shows the common characteristics of performing regions. The report includes data on the four newest OECD member countries: Chile, Estonia, Israel and Slovenia. Where available, data on Brazil, China, India, the Russian Federation and South Africa are also included. This publication provides a dynamic link (StatLink) for each graph and map, which directs the user to a web page where the corresponding data are available in Excel®.

Governments need reliable and comparable data to underpin policies that promote regional growth. The OECD has developed a unique database of sub-national statistics that allow policymakers to analyse trends both domestically and across countries. The use of internationally comparable data has been a critical input in reforming the objectives and tools of regional development policy in OECD countries. By providing measures of regional performance and identifying factors that increase the competitive edge of a region and the well-being of its current and future population, OECD data has encouraged a shift from a subsidy-based, compensatory approach to regional policy to one that focuses on enhancing regional potential. OECD Regions at a Glance reflects continuous effort by the OECD Working Party on Territorial Indicators in collaboration with the OECD Secretariat to improve the evidence base at regional and local levels.

International comparisons of economies and societies tend to be undertaken at the country level. Statistics on production capacities refer to gross domestic product (GDP) for example, while health and education levels tend similarly to be measured and debated in national terms. However, the differences between countries are often not as great as the disparities within them. In Chile, Poland, Portugal and Turkey, for example, the GDP per worker in the best performing region is more than three times higher than in the worst performing region. In several places, disparities have widened recently, as evidenced by the doubling of the difference in employment growth rate across OECD regions after the 2008-09 recession. Understanding the differences and similarities in regional economic structures is essential for designing effective strategies to resume and maintain aggregate growth. At the same time, statistical evidence specific to regional contexts can help strengthen the recovery of OECD countries by identifying potential and challenges of places to become engines of sustainable economic and social development.

In any analytical study conducted at sub-national levels, the choice of the territorial unit is of prime importance. To address this issue, the OECD has classified two levels of geographic units within each member country (Table A.1 in Annex A). The higher level (Territorial level 2 [TL2]) consists of 362 larger regions while the lower level (Territorial level 3 [TL3]) is composed of 1 794 smaller regions. All the territorial units are defined within national borders and in most of the cases correspond to administrative regions. Regions at the lower level (TL3) are contained within the higher level (TL2).

In 2009, 10% of regions accounted for approximately 40% of the total population in OECD countries. The concentration of population was highest in Australia, Canada, Iceland and the United States, where differences in climatic and environmental conditions discourage human settlement in some areas (Figure 1.1).

In 2009, almost half of the total OECD population (47%) lived in predominantly urban regions, which accounted for less than 6% of the total area. More than 60% of the population lived in predominantly urban regions in the Netherlands, Belgium and the United Kingdom (Figure 2.1).

Local factors matter in achieving national sustained growth. In fact, 10% of OECD regions were responsible for 37% of OECD gross domestic product (GDP) in 2007. In Greece and Portugal the 10% of regions with the highest output contributed half or more of the national GDP. Similarly, in countries such as the Russian Federation and Brazil contribution to national GDP was very regionally concentrated (Figure 3.1). On the other hand, GDP in Belgium, the Slovak Republic and the Netherlands was more evenly distributed among regions, with the 10% regions with the highest output accounting for no more than 25% of total GDP.

A small number of regions drives employment creation at the national level. On average, 36% of overall employment creation in OECD countries between 1999 and 2009 was accounted for by just 10% of regions. The regional contribution to national employment creation was particularly concentrated in certain countries. In Sweden, the United States and Greece (among OECD countries) and South Africa, more than 60% of employment growth was spurred by 10% of regions (Figure 4.1).

Labour productivity growth is considered a key indicator to assess regional competitiveness and an essential driver of change in living standards. Regional living conditions are raised by continued gains in labour productivity, along with an increase in labour utilisation. In fact, only economies that manage to simultaneously sustain employment and productivity growth will increase their competitive edge and maintain it in the long run.

Regional differences in gross domestic product (GDP) per capita within countries are often substantial and larger than among OECD countries. According to the Gini index, the emerging economies – China, the Russian Federation, India and Brazil – displayed the greatest disparity in GDP per capita in 2007 followed by Mexico, Chile, the Slovak Republic and Turkey among the OECD countries (Figure 6.1).

Predominantly urban regions attract the largest share of economic activity. In 2007, almost 60% of total gross domestic product (GDP) in OECD countries was produced in urban regions that account for less than half of the OECD population. Predominantly rural areas contributed 14% to overall GDP, even though in Ireland, Slovenia and in the Scandinavian countries the GDP produced by rural regions was above 40% of national GDP (Figure 7.1).

The economic recession has had a differentiated impact on the loss of jobs within OECD countries. Three-fourths of OECD regions that showed employment growth between 1999 and 2007 shifted to an employment decline between 2008 and 2009. Moreover, disparities in job losses have increased. In 1999-2007 the difference in employment growth in 75% of the regions was around 1.5 percentage points. This value doubled in 2008-09 (Figure 8.1A).

The quality of human capital is central to increasing productivity, as the ability to generate and make use of innovation depends, among other factors, on the skill level of the labour force. The proportion of the labour force with tertiary education is a common indicator for a region’s capacity to produce and absorb innovation.

International migration is an important factor that contributes to demographic and human capital changes in many OECD regions. Information on the skill composition of migrants is important to understand its effects on local labour markets. Moreover, there is evidence that highly skilled migrants bring higher productivity, entrepreneurial assets and trading opportunities to host regions. The past decade has seen a substantial increase in the employment of immigrants with tertiary educational attainment, partly as a result of changes in migration policies to favour admission of highly qualified workers. Regional differences in the distribution of highly skilled foreign-born individuals across regions are particularly marked in Mexico, the United States, Spain, Canada and Germany (Figure 10.1). In Canada, the population of foreign-born individuals is on average highly educated. The result for Canada is partly explained by the large weight given to formal education in their immigration policies. Despite the large increases in recent inflows of low-skilled migrants from South America, Spanish regions have on average a similar proportion of highly skilled people compared to other Southern European countries such Italy and Portugal.

While deeply rooted in local history, geography, institutions and social capital, the production structure of regions keeps evolving over time as a result of both macroeconomic changes and economic policies at the national or subnational level.

Knowledge-oriented sectors receive a great deal of attention due to their association with innovative products, new production processes and their impact on productivity growth and international competitiveness.

Sub-national governments have an important role in public investment: on average, around half of the total public investment in OECD countries is carried out by sub-national governements. This share is as high as two-thirds in some federal and regionalised countries such as Canada, Australia, Austria, Switzerland, Belgium and Germany (Figure 13.1).

Expenditures and personnel employed in research and development (R&D) are common proxies for innovation activities in regions. According to the Frascati Manual, R&D is defined as a "creative work undertaken on a systematic basis in order to increase the stock of knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications."

The gross domestic expenditure in research and development (R&D) is usually broken down among four sectors of performance: business enterprise, government, higher education and private non-profit. In general, R&D performed by the business sector accounts for the largest part of R&D activities. In 2007 R&D performed by the business sector was close to 70% of total R&D in OECD countries. At the same time governments can play an important role in fostering investment in R&D; and most basic research is performed in universities and public research organisations.

Patent applications can be used as an indicator of inventive activity. Patents are one of the mechanisms used to appropriate the results of investments in intangibles. They are a good proxy of innovation efforts; however, patenting activity is strongly associated with sectoral patterns, since some economic sectors (i.e. pharmaceuticals and electronics) tend to show higher patenting trends due to the type of innovative activity than other sectors (i.e. textiles or other low-tech sectors). The analysis of regional patenting helps assess the spatial distribution of inventive activity, not only between countries, but within countries.

The percentage of regional patent applications with coinventors from another region, whether or not they belong to the same country, is an indicator of co-operation activity in innovation between localities.

The disposable income of households can be seen as the maximum amount that a unit can afford to spend on consumption goods or services without having to reduce its financial or non-financial assets or by increasing its liabilities. As such, it is a better indicator of the material well-being of citizens than gross domestic product (GDP) per inhabitant. Regions where net commuter flows are high may display a very high GDP per capita which does not translate into a correspondingly high income for their inhabitants (the most notable case is London in the United Kingdom).

In most OECD countries the population is ageing. Due to higher life expectancy and low fertility rates, the elderly population (those aged 65 years and over), accounts for 14% of OECD population in 2008. The proportion of elderly population is remarkably lower in the emerging economies (Brazil, China, India, and South Africa) and Mexico and Turkey (Figure 19.1).

Interregional mobility within countries is an important component of the change in the demographic structure, indicating whether the ageing of certain areas is reinforced by outflows of the working age population.

California, New York, Texas and Florida in the United States had the highest foreign-born population among OECD regions in 2005 (more than 3.6 million each). California hosts more immigrants than any OECD country and the state of New York would rank fifth, after Canada, Australia, the United Kingdom and France, if compared to OECD countries. The stock of immigrants accounts for more than one-third of the total population in some TL2 regions in Australia, Canada and Switzerland, as well as in London (United Kingdom).

Unemployment has soared in OECD countries in recent years, from 5.6% in 2007 to 8.3% in 2009. Recent OECD analysis suggests a further rise in the past two years. In 2009, regional differences in unemployment rates within OECD countries were almost two times higher (28 percentage points) than differences among OECD countries (15 percentage points).

About 61% of all women in OECD countries were in the labour force, compared with 80% of all men in 2009. Broadening access to women to the labour market would require a mix of policies, including equal access to higher education and training; measures to reconcile family and work life; and tools to strengthen gender equality in the workplace.

Education provides individuals with knowledge and competencies to participate effectively in society and to break the cycle of disadvantage. Still, in 2008 one-fourth of the OECD population had only a basic education and in most of the regions in Mexico and Portugal, and in some regions in Chile and Spain, this proportion was as high as 50%.

The delivery of safe, high-quality medical services requires among other things an adequate number of doctors. Even though other components of health systems (such as nurse practitioners and tele-health technology) can substitute for doctors, the variation in the number of doctors reflects differences in the design and territorial management of the health system.

Quality-of-life differentials across and within regions are largely explained by the local availability of public services. Large segments of the world population still lack access to basic public goods, such as piped water or sewage facilities because they live in places that are historically underserved, too geographically isolated, and economically marginal. Poor access to services is also a key dimension of poverty in slums and in the peripheries of large cities.

Monitoring changes in land cover is crucial to understanding how urbanisation impacts the natural environment. Detailed spatial information on these changes can help identify which areas have been exposed to larger urban pressure, guiding targeted policy interventions where this expansion threatens the quality of the landscape or bio-diversity. In 2001, urban land ranged from very low levels in sparsely populated countries (less than 0.1% of the national territory in Iceland and Canada) to significant levels in densely inhabited ones (more than 10% in Belgium and the Netherlands) (Figure 27.1). Emerging economies had generally low-intermediate levels of their territory covered by artificial surfaces (from 0.5% in Brazil to 1% in India).

Forests are strategic assets for sustainable development and for climate change mitigation. Besides being essential for biodiversity and the environment, they fulfil other functions for society, providing employment opportunities as well as recreational value. A significant fraction of the land of OECD countries is covered by forests. There are however large differences across and within countries. Among the countries with the largest interregional variation, the United States, Canada, Chile, Mexico and Norway in the OECD – and Brazil and the Russian Federation among emerging economies – display regions with more than 80% of the land covered by forests (Figure 28.1). At the same time, in all these countries with the exception of Norway, more than one region has less than 10% of forested land. Given these large regional differences, it is very important to put in place co-ordinated policies for forest conservation at the national, regional and local level.

The urgency of the climate change challenge requires a rapid, sustained, and effective transition to lower carbon regional economies. Apart from necessary reduction in greenhouse gases, there is also a need to cut emissions of other pollutants like toxic gases or fine particles that can severely threaten people’s health. Regional and city-level policies have a key role to play in this transition.

Waste management has potential impacts on human health and ecosystems. However, there are also concerns about the treatment and disposal capacity of existing facilities, and on the location and social acceptance of new facilities. The economic, environmental and social impact of waste is relevant in regions also because waste disposal is usually managed at the local level. Many OECD countries have strengthened measures for waste minimisation, recycling, product life cycle management and extended producer responsibility.

Infrastructure is the foundation of regional development and has been the target of significant investment through regional policy in the past years. Regional competitiveness is affected by infrastructure endowment, such as transport or telecommunication networks which, together with investment in human capital and innovation, can improve the access to markets, increase the connectivity of regions and provide services more efficiently.

Innovation in mitigation technology is a means to address climate change. The patenting activity of regions in green technology provides a measure of the efforts and pace of innovation. Japan and the United States display the top performing regions in number of patents in new sectors, such as green technologies, biotechnologies and nanotechnologies. The number of patents in biotechnologies is higher and patenting activities less recent than in green and nanotechnologies. Among the top performing regions in green patenting, Aichi and Tokyo (Japan) have emerged most recently (Figure 32.1).